US expects higher oil and gas output in July
The US federal government reported June 14 that it was expecting increases in both oil and gas production in the Lower 48 states next month.
The US Energy Information Administration (EIA) reported that crude oil production from the seven primary shale basins in the Lower 48 is modelled to increase by about 0.5% from June levels to reach 7.8mn barrels/day.
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Most of the gains are expected from the Permian basin situated mostly in Texas, which is forecast to see a 1.2% increase in output from June to 4.7mn b/d. The only other US shale basin expected to see an increase in oil production is the Appalachia shale, which is primarily a natural gas basin. Appalachian shale oil production is expected to increase by 0.8%, but only to 129,000 b/d.
While the Permian is the most lucrative basin, it is also among the more expensive given the amount of drilling necessary to turn a steady profit. Trimming its hydrocarbon portfolio further, Royal Dutch is reportedly mulling an exit from the Permian.
For natural gas, the EIA predicts only a very minor increase in production, from 84.2bn ft3/d to 84.3bn ft3/d, an increase of just 0.05%. The Haynesville, Permian and Appalachia basins all are forecast to show gains in production next month. The Haynesville shale, spread out mostly over northern Louisiana, is expected to see the highest gains, increasing from 12.9bn ft3/d to 13bn ft3/d.
The Appalachia shale, which includes both the Utica and Marcellus plays, is the most prolific gas producer in the Lower 48. Gains there, however, are minor, with the 34.6bn ft3/d expected in July representing an increase of just 18mn ft3/d, or just 0.05%.
The EIA in its short-term market report for June estimated that, because US crude oil prices are expected to remain above $60/b this year, producers will drill enough to boost production from 2021 levels. Oil production for 2022 is expected increase from this year’s expected average of 11.1mn b/d to 11.9mn b/d. Gas production is forecast to average 93.9bn ft3/d next year, an increase from the 92.9bn ft3/d expected in the second half of the year.